The European M&A landscape has undergone a transformation in recent times. While 2021 saw deals reach a seven year high, the market witnessed a cooling off in 2023. Spiralling inflation, rising interest rates, and the ongoing war in Ukraine instilled a sense of uncertainty among investors and a sharp decline in deal volume both in Europe and the rest of the world.
But now M&A activity in Europe seems to be turning a corner. So if you are considering a new role in the continent, let’s take a look at how the market is currently fairing and whether now is the right time for a career move across the channel.
A hotspot for business expansion
While London undoubtedly remains the largest market for M&A in Europe, the promise of a global uptick in M&A transactions led by the US and the UK has meant that many businesses are looking to expand into new markets. With Europe becoming their go-to destinations, it means exciting opportunities lie ahead for M&A professionals across the continent.
There are many economic and political factors affecting the financial markets at the moment. But inflation easing in the Eurozone and a cut to interest rates predicted to be on the horizon spells good news for Europe. Pent-up demand from private equity firms and strategic buyers, coupled with a gradual increase in activity towards the end of 2023, suggests a bright future for the European market.
While the job market looks promising as deal structures become more complex. M&A professionals with a wealth of expertise in specific sectors and executing on highly complicated deals will be the ones in highest demand. The ability to navigate a volatile market environment and adapt strategies accordingly will be highly valued.
European M&A trends to watch
While last year saw a slow in M&A activity across the continent, one industry that bucked the trend was the insurance brokerage sector. In the face of economic uncertainty and geopolitical tensions this rise in demand for risk transfer solutions has fueled a surge in insurance broking activity across Europe. With no signs of slowing down this could be an interesting area for those on both the buy and sell side.
The rest of M&A looks to be focused on high growth sectors. Technological advancements and evolving consumer trends continue to fuel activity in sectors like AI, healthcare, and renewable energy.
Mid-market deals are expected to remain a driving force in Europe as these transactions offer a good trade off between risk and reward compared to larger cap deals. However, navigating the market demands a keen eye for detail and a deep understanding of the current climate. Thorough due diligence, a focus on value creation, and adaptability in deal structures will be crucial for those looking for success in the European market.
ESG on the agenda
The growing influence of ESG will have a big impact on deals in Europe both now and in the future. Investors, regulators, and consumers are increasingly scrutinising companies practices and policies around sustainability. This will translate to a heightened focus on ESG due diligence during the M&A process.
Companies with strong ESG credentials are likely to attract higher valuations and face less regulatory pushback. While those with poor ESG practices could face deal delays or even blockages.
Therefore M&A professionals need to stay on top of the evolving ESG regulations and incorporate them into their dealmaking strategies if they are looking to break into the European market. This opens doors for those with expertise in ESG integration and the ability to navigate these complexities as sustainability continues to move up the business agenda.
Increasing regulation across the globe
M&A activity in Europe is increasingly subject to heightened regulatory scrutiny particularly around competition laws. We are seeing authorities like the European Commission flexing their muscles and taking a more assertive stance towards deals.
This translates to a longer, more complex approval process for certain transactions, requiring careful navigation by dealmakers and a thorough understanding of regulatory hurdles before embarking on a deal. But with the US and the UK introducing even tighter regulations, Europe is looking like a more attractive option.
So who holds the cards?
The high cost of borrowing coupled with economic uncertainty has seen the European market slow and buyers be hesitant. This in turn has driven down valuations and a buyer market has emerged. But with a number of key elections around Europe, buyers may be waiting to see what the financial future holds before making a move.
But high-quality assets with strong growth potential will still be highly attractive and command a premium. The key lies in a strategic approach, where buyers focus on identifying undervalued targets with clear potential.
Senior M&A professionals will need to be adept at creative deal structuring. Striking the right balance between securing attractive terms for clients and ensuring deals remain commercially viable will be the way to progress your M&A career in the market.
As experienced recruiters we understand that when it comes to an international career move there are many factors to consider. But with M&A activity in Europe hotting up now could be the perfect time to find new opportunities on the continent.
Looking for a new M&A role?
At Gambit Search we are experts in M&A recruitment securing our candidates the most sought after roles in corporate finance. Get in touch with our team here or by calling 0203 633 2500 find out how we can help you get that dream role.
